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It’s more than just technology and digital marketing developments that is causing hotels to look at their strategies and approach the markets differently. Social-political events around the world are forcing hotels to develop plans to manage loss of markets and sudden drop in demand.
A global recession followed by regional recessions since 2008 have made hoteliers more prepared for the unexpected, while to also plan for the longer term – causing a greater demand in data intelligence that can be acted on immediately. The increase in terror threats and acts is causing a ripple through markets which was very clearly seen during 2015 and will continue to impact prices and revenue management. This cannot just be pertained to regions caught in the conflict but also cities and countries on high alert, as was seen with Paris.
Hotels need to further prepare for the inevitable and ensure rates for the long-view and short-view support the overall operation of the hotel, while also ensuring to support its guests and customers.
Natural disasters, protests and demonstrations, and terror acts have forced rates plummeting, occupancy dwindle and cancellations tide in; making competition ever more challenging. What continues to lie ahead this year?
2016 Challenges
1. Competition continues to be the biggest challenge and how to stand out from the rest of the market. Hotels will increase the drive for direct bookings to prevent a large proportion of revenue going to OTAs and third parties.
2. The ongoing political and terror crises in Europe and the Middle East, as areas of conflict change and threats to major tourist destinations are made targets, hotels will need emergency strategies.
3. Consolidations and mergers in the market will require smaller hotel groups and independent hotels to maintain its market share and strengthen its proposition. Hotels caught in the consolidation will need to keep its market identity to continue to bring high-levels of bookings.
4. OTAs will continue to get stronger as consumers look towards brand search and finding easier, and quicker deals, especially as smaller OTAs find their foot and place in the market.
Sales changes 2016:
The OTA and Meta search market will continue to evolve and as the distinction between them becomes less clear each business will begin chewing into one another. Companies managing properties, like BookLogic and other channel managers, will begin to see a greater demand from OTAs for business and delivery of availability. There will be a continue fight to grab supply for the market while hoteliers try to optimise the most profitable channels. The big questions will be – who will win out and how?
Market changes
The big change in 2016 will be the provision of channel management and how service and technology providers will begin to consolidate and integrate technologies. There is an ever-increasing need to focus on commission-based models. Single-solution providers will struggle as hotels demand greater insight to the data and distribution of its inventory, in order to take control of the sales channels for better profitability. Companies like Amadeus is an example of leading the industry towards “per booking-based” solutions offering a better vision of future of revenue volume.
Solution acquisition
2016 will be the year of acquisitions as multi-product providers extend their product portfolio by acquiring single-solution-based businesses. While single-based businesses will try to expand the offering to focus on data intelligence, for which hoteliers need to make bigger and better decisions.
Hoteliers next steps
This is the year for hoteliers to take control of their website to begin delivering direct bookings and improving the relationship with existing customers. Together with a more sophisticated approach to managing distribution channels, no longer just rate distribution but also the necessity for content distribution. Booking.com and wholesales will be taken more seriously as the larger OTA market begins to settle and the consumer product offering becomes clearer, making customer acquisition more affordable.
Rate parity
The result of new EU regulations will mean rate parity will be eliminated, which is even affecting the Turkish market as the industry begins to homogenise across the world. OTAs will be required to reduce its influence on hotels to maintain rate parity, and this will give hoteliers greater freedom and opportunity to drive direct bookings.
OTAs perseverance
OTAs are becoming worried of technology and marketing providers as they begin to snap them up as an inclusion to their sales channel and distribution services. Booking.com purchased buteeq and pricematch exactly for this purpose, Accor acquired fastbooking, and Hotelbeds offer a direct booking engine and accompanying products for hotel websites. This will be the greater focus and worry for OTAs in order to increase revenue opportunities and improve hotel retention, reminiscent of the old hotel representation model. OTAs are trying to be too many things without focusing on what they specialise in very well, which is eating away at their business and core abilities.
8 Predictions: New technologies and innovation in 2016
1. Market will be more consolidated and monopolized. There will be more acquisitions and mergers in 2016 and 2017, especially within the mid-market
2. Channel management companies will begin to struggle during 2016. Central Reservation Systems (CRS) will consolidate the market and begin to focus on CRS offering to stay alive. Channel manager business will be more self-service; hotels will do more of their own mappings to have more control, especially with changes to rate parity
3. Companies selling “whole package” technology and services will be better off; those who offer stand-alone products will begin to diminish.
4. GDS-only companies will continue to struggle financially, and will likely go bankrupt. Hoteliers need to seeks services that integrate GDS as part of an offering.
5. Booking engines will need channel managers incorporated in their system and company, without which the market potentially is significantly reduced.
6. Property Management Systems (PMS) will begin losing touch with the market, especially online booking engine and channel management business, because the first requires online sales expertise and the latter requires a lot of support.
7. Google is expected to launch a new product, which will rock the market. A likely move from CPC to CPA, like TripAdvisor moved from tripconnect (CPC) to instant booking (CPA). This is going to filter throughout the market.
8. What is the future of MetaSearch Engines as business significantly grows and diversifies? We are likely to see a watering down of big international chains so heavily influencing the results.
